S&P 500 reaches record levels after summer selloff

The S&P 500 closed at 7798.99 on August 13, marking its 27th record high of the year. Six weeks earlier, the index was sliding through a July selloff that had investors quietly panic-refreshing their brokerage apps.

By late August, the index had pulled back slightly to trade in the 7711 to 7731 range, still up roughly 13% year-to-date.

What drove the rebound

The recovery rests on two legs, and both are holding firm for now. First, corporate earnings came in strong, with second-quarter S&P 500 profit growth hitting approximately 33.5% year-over-year, the best showing since 2021. A significant portion of that came from companies riding the AI spending wave, where capital expenditures from major technology firms translated directly into outsized revenue beats across the supply chain.

Second, inflation cooperated. July producer and consumer price data both came in cooler than expected, which had a predictable effect on rate-hike anxiety. Traders scaled back their bets on a September Federal Reserve move, and equities responded the way they usually do when the threat of tighter money recedes: by going up.

The July pullback had been sharp enough to rattle nerves. The S&P 500 fell roughly 5% from its early-summer levels, while the Nasdaq Composite came closer to correction territory, dropping somewhere between 7% and 8% from its early-June peak. The proximate causes were a mix of valuation concerns around heavily concentrated tech positions and geopolitical noise tied to U.S.-Iran tensions.

The Nasdaq 100’s quiet underperformance

The S&P 500 is printing records. The Nasdaq 100, the index most associated with the AI trade, has not caught up. As of late August, it remained modestly below its early-June highs, even as the broader market surged past its own previous peaks.

The S&P 500’s record run has been carried in part by a broadening of market participation, with sectors outside of mega-cap tech contributing more meaningfully to gains than they did in 2024 or early 2025.

What comes next

Analysts who revised their year-end targets after the August record are now pointing to approximately 7900 as a reasonable landing zone for the S&P 500 by December, driven by persistent earnings optimism and sustained demand for AI technologies.

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